BOWEN v THE PICCADILLY ARCADE BODY CORPORATE S79616 [2022] NZHC 1652

BOWEN v THE PICCADILLY ARCADE BODY CORPORATE S79616 [2022] NZHC 1652 [13 July 2022]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYI TE KŌTI MATUA O AOTEAROATAURANGA MOANA ROHECIV-2022-470-000027[2022] NZHC 1652BETWEEN ALLAN JOHN BOWEN and KAY ELAINEBOWENAppellantsAND THE PICCADILLY ARCADE BODYCORPORATE S79616RespondentHearing: 5 July 2022Appearances: N Elsmore for the AppellantsD Fraundorfer and R Rosser for the RespondentJudgment: 13 July 2022JUDGMENT OF GORDON JThis judgment was delivered by meon 13 July 2022 at 12 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors/Counsel:D Fraundorfer, Holland Beckett Law, TaurangaR Rosser, Holland Beckett Law, TaurangaP Stuart, Rejthar Stuart Law, TaurangaN Elsmore, Barrister, Tauranga[1] This is an appeal against a decision of Judge Cameron in the District Court atTauranga declining an application to extinguish an easement in the form of a right ofway on land in the commercial centre of Tauranga1[2] The appellants, Allan and Kay Bowen (the Bowens) are the owners of acommercial building which is the burdened land (the Bowens' property).[3] The appeal is opposed by the Piccadilly Arcade Body Corporate (BodyCorporate) which administers the commercial and retail premises situated in thePiccadilly Arcade (arcade). The arcade is adjacent to the Bowens' property and is thebenefitted land (arcade land).[4] There is a separate issue as to whether new evidence in the form of an affidavitfrom Mr Bowen should be adduced on appeal. Its admission is opposed by the BodyCorporate which has filed affidavits in support of its opposition.Background[5] The Bowens' property at 53 Devonport Road and the arcade are situatedbetween two commercial streets in downtown Tauranga, namely Devonport Road andGrey Street. The arcade runs all the way between the two streets. The Bowens'property does not.[6] When the right of way was created on 18 November 1953, access was fromDevonport Road with no access available from Grey Street. Attached to this judgmentas Annexure A is a copy of the Certificate of Title for 53 Devonport Road showing theright of way as it then was highlighted in yellow. What is now the arcade land runsalong the edge of the right of way extending beyond the rear boundary of 53 DevonportRoad all the way to Grey Street, which runs parallel to Devonport Road.[7] The right of way, when created, was 3.3 metres wide and stoppedapproximately 6.6 metres short of the rear boundary of the Bowens' property. At thattime, there was a concrete shed on the Bowens' property at the end of the right of way.1 Bowen v Piccadilly Arcade Body Corporate [2022] NZDC 1795.[8] The arcade land is at 43 Devonport Road. The arcade was built in about 1966.It is a unit title development with 23 commercial and retail stores as the principal units.Four of the units (shops) have rear doors that open on to the right of way (benefittedunits).[9] The Bowens have owned their property since 2018. They have owned the nextdoor property at 55 Devonport Road since 1984.[10] In 1986, the right of way was partially extinguished. The then-owners of53 Devonport Road were redeveloping and the then-owner of the arcade land wasasked to consent to a structure being built across the Devonport Road end of the rightof way. The evidence of David Bridgens, the chairman of the Body Corporate, basedon the Body Corporate's records, is that this consent was given on the understandingthat the concrete shed at the end of the right of way would be demolished and a sectionof the Bowens' land occupied by the shed (the strip of land) would be surrendered tothe Tauranga City Council (Council) to allow a service lane from Grey Street toconnect to the right of way preserving its functionality. This was a condition of thebuilding permit issued by the Council for the 1986 redevelopment.[11] Thus by agreement the easement was partially surrendered, allowing a portionof the land at the Devonport Road end to be utilised as part of the commercial buildingat 53 Devonport Road, now occupied by a Life Pharmacy. The effect of this was toblock any access to the respective properties at the Devonport Road end of the rightof way.[12] This left unsurrendered a portion of the original easement. It is approximately10.5 metres long and its width remains as the entire 3.3 metre distance between therespective buildings.[13] The strip of land was not surrendered in terms of the condition of consentreferred to above. This strip of land prevents any person from accessing the right ofway from the service lane leading off Grey Street without first having to cross what island owned by the Bowens. Mr Bridgens says he has written to and met withrepresentatives of the Council to request that the position regarding the strip of landbe rectified. In his reply affidavit Mr Bowen says that the strip of land was includedtogether with other land in a designation for a service lane from Grey Street toElizabeth Street (which runs perpendicular to Grey Street) but part of the designationwhich he describes as the "north section" was uplifted after Environment Courthearings. It seems, on Mr Bowen's evidence, the strip of land is not currently thesubject of a designation.[14] Attached to this judgment as Annexure B is a digital title plan for the Bowens'property, which demonstrates the position as referred to above:(a) Devonport Road is at the top of the page and Grey Street (not shownon the title) is at the bottom of the page;(b) The Bowens' property is the area marked both '2' and A ;(c) The right of way as it presently exists is the area marked C andhighlighted in blue;(d) The area highlighted in green is the part of the right of way partiallyextinguished in 1986. It is now part of the Life Pharmacy premises;(e) The area highlighted in yellow is the strip of land (owned by theBowens). There is no physical impediment preventing a person orvehicle crossing the strip of land to access the right of way; and(f) The area highlighted in pink is the service lane which runs from GreyStreet.[15] From the late 1980s until late 2020/early 2021 the occupants of the arcade wereallowed to cross the strip of land with the consent of the previous owners of theBowens' property and initially, the Bowens did not object to the practice. The right ofway was used to bring vehicles for deliveries to and from the rear doors of thebenefitted units, with their staff coming and going from the stores along the right ofway.[16] From around late 2020/early 2021 the Bowens have insisted that the arcadeoccupants are not able to cross the strip of land.The easement – wording[17] I set out below the wording of the easement as it appears in the Memorandumof Transfer followed by the wording in a form which refers to the present owners ofthe land. The original wording is as follows: the Transferor doth hereby transfer and grant unto the Transferee itssuccessors and assigns and its servants, agents, workmen and visitors and allpersons having in common with the Transferor and all other persons lawfullyusing the same business with it or them a free perpetual right of way ingress,egress and regress on horseback or on foot and with or without implementsand vehicles of every description loaded or unloaded by night as well as byday in over and upon the land marked right of way on the said Deposited PlanNo. S.2030 and thereon coloured yellow for the purpose of giving access toand from the first above described land and any part thereof and to and fromthe Public Road on the said Deposited Plan No. S.2030. [Emphasis added][18] The key wording as the easement applies to the parties is:The Transferor [ie the former owners of the Bowens' property] to grant theTransferee [ie the present owners of the arcade] and their successors in titleand their servants, agents, workmen and visitors a free perpetual right ofway ingress, egress and regress on horseback or on foot and with or withoutimplements and vehicles of every description loaded or unloaded by night aswell as by day in over and upon the land marked right of way on [the title for53 Devonport Road] for the purpose of giving access to and from [the arcadeland and any part thereof] and to and from Devonport Road [emphasis added].District Court[19] The position of the Bowens in the District Court was that the nature and extentof the use made of the right of way had changed since the partial surrender of theoriginal easement. It was submitted that the original right of way was for access fromDevonport Road only and that it never extended through to Grey Street. It wassubmitted that now there was no access from Devonport Road the easement hadeffectively been made redundant.[20] For the Body Corporate the evidence was that the benefitted unit holders stilluse the right of way. Mr Bridgens said he believed that by opening their rear doorsthis provides ventilation when required. Mr Bridgens also said that the right of wayalso needed to be accessible for maintenance to the water pipes and air-conditioningunits on the outside wall of the arcade. Additionally Mr Bridgens' evidence was thatthe only practicable way that maintenance workers could access the roof of the arcadewhen required is by using the right of way to unload workers and tools.[21] In particular, in terms of their legal case, it was submitted for the Bowens thats 317(1)(a), (b) and (d) of the Property Law Act 2007 (the Act) applied and that:(a) In terms of s 317(1)(a) the easement ought to be extinguished becausea change in its use (as a result of it not being able to be used fordeliveries without vehicles crossing the strip of land) meant it wasredundant;(b) In terms of s 317(1)(b) the right of way continuing to exist would be anunreasonable impediment to any future development plans that theBowens had for their land because the right of way was redundant; and(c) In terms of s 317(1)(d) the Body Corporate and other persons entitledto use the right of way would not be substantially injured by itsextinguishment. The case again under this limb was that because theright of way is landlocked and incapable of use for goods delivery it isnow redundant.[22] After setting out the case for both parties the Judge held:[12] It is not clear why the entire easement was not surrendered in 1989 [sic].I am not prepared to speculate on that. What is known, though, is that theBowens bought their property in 2018 with the full knowledge that thiseasement was registered against the title to their property. They took no issuewith persons associated with Piccadilly Arcade accessing that right-of-wayuntil about March/April 2021. They are now acting within their legal rightsto prevent persons crossing the strip of land owned by them and immediatelyadjacent to the easement land. However, that still allows the various tenantsof the Piccadilly Arcade to open the rear doors for ventilation and to allowmaintenance workers to access that area from the interior units, for exampleto gain entry onto the roof. The fact that inwards goods can be delivered tothe various tenants through the main entrances does not render its use bymaintenance workers and tenants any less valid.[13] While I agree that the nature and extent of the use of the easement landhas changed (predominantly now excluding the use of rear doors for deliveryof goods), I am not satisfied under s 317(1) of the Property Law Act 2007 thatthe easement ought to be extinguished and decline the application accordingly.Approach on appeal[23] The appeal is brought as of right.2 It is an appeal by way of re-hearing.3 ThisCourt must reach its own view of the merits without deferring to the assessment of theDistrict Court Judge.4 The Bowens bear the onus of satisfying this Court that itsassessment of the merits should differ from that of the District Court. It is only if thisCourt considers that the appealed decision is wrong that the Court is justified ininterfering with the decision.5Grounds of appeal[24] The Bowens appeal the Judge's decision on the grounds that it is erroneous infact and law as follows:(a) The Judge has created a new easement in breach of the provisions ofthe Act;(b) The Judge failed to follow the principles set out in Synlait Milk Ltd vNZ Industrial Park Ltd in determining the correct approach toextinguish an easement;6(c) The Judge was incorrect in fact and law to find that the easement hasnot changed in its use;(d) There was no evidence to support the conclusion that the easement isused by the parties to open doors and to access it for maintenance;(e) The Judge failed to consider the burden upon the servient land inallowing the easement to remain;2 District Court Act 2016, s 124.3 High Court Rules 2016, r 20.18.4 Austin, Nichols & Co Inc v Stichting Loadstar [2007] NZSC 103, [2008] 2 NZLR 141 at [4]–[5].5 At [4].6 Synlait Milk Ltd v NZ Industrial Park Ltd [2020] NZSC 157, [2020] 1 NZLR 657.(f) Extinguishing the easement would not substantially injure any person;and(g) The Judge was wrong in law by allowing the variation of the easementwhen no application was before the District Court pursuant to s 316 ofthe Act.Relevant statutory provisions[25] The application to extinguish the easement was made in reliance on ss 316 and317 of the Act. Those sections relevantly provide as follows:316 Application for order under section 317(1) A person bound by an easement, a positive covenant, or a restrictivecovenant (including a covenant expressed or implied in an easement)may make an application to a court for an order under section 317modifying or extinguishing that easement or covenant.(2) That application may be made in a proceeding brought by that personfor the purpose, or in a proceeding brought by any person in relation to,or in relation to land burdened by, that easement or covenant.317 Court may modify or extinguish easement or covenant(1) On an application (made and served in accordance with section 316) foran order under this section, a court may, by order, modify or extinguish(wholly or in part) the easement or covenant to which the applicationrelates (the easement or covenant) if satisfied that—(a) the easement or covenant ought to be modified or extinguished(wholly or in part) because of a change since its creation in all orany of the following:(i) the nature or extent of the use being made of the benefitedland, the burdened land, or both:(ii) the character of the neighbourhood:(iii) any other circumstance the court considers relevant; or(b) the continuation in force of the easement or covenant in itsexisting form would impede the reasonable use of the burdenedland in a different way, or to a different extent, from that whichcould reasonably have been foreseen by the original parties to theeasement or covenant at the time of its creation; or(c) 7(d) the proposed modification or extinguishment will notsubstantially injure any person entitled; or(e) (f) 8(2) An order under this section modifying or extinguishing the easement orcovenant may require any person who made an application for the orderto pay to any person specified in the order reasonable compensation asdetermined by the court.Case law[26] The application of s 317 was considered by the Supreme Court in Synlait MilkLtd v New Zealand Industrial Park Ltd. The Supreme Court referred to the two-stageapproach required when a court is determining an application under s 317:9[90] To conclude on this point, s 317 requires a two-stage approach. Thecourt's first task is to determine whether one or more of the grounds in s 317(1)is made out. If so, the second task is to determine whether the discretion toextinguish or modify the easement or covenant at issue should be exercised(and, if so, to determine whether compensation should be payable). Theexercise of the discretion to modify or extinguish the easement or covenantrequires consideration of all relevant factors (including the power to awardcompensation). We do not see any intent that any one factor should bedisqualifying.The case for each party[27] The overarching submission by counsel for the Bowens, Mr Elsmore, is thatthe use of the right of way has fundamentally changed in that it can no longer be usedfor access to and from Devonport Road for deliveries. The right of way is thusredundant and the Judge should have made an order extinguishing the easement.[28] In response, again in an overarching submission, Mr Fraundorfer for the BodyCorporate says this approach disregards the two-stage approach in Synlait. Itdisregards the requirement for the Court to also find that, because of the consequences7 Section 317(1)(c) relates to modification or extinguishment by consent or waiver and is notrelevant to this appeal.8 Section 317(1)(e) and (f) apply only to covenants, not easements.9 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6. Although the case related to theextinguishment of a covenant rather than an easement the same principles apply to an easement interms of the approach to s 317.of the change of use it should extinguish the easement. That is the second stage thatis required. That is what the Judge did.Approach to grounds of appeal[29] The way in which the grounds of appeal are framed does not make for an easyanalysis following the two-stage approach required. Further, neither the notice ofappeal nor the written submissions expressly states which of the grounds in s 317 is/arerelied on. The tenor of the submissions is that the Bowens rely, as they did in theDistrict Court, on s 317(1)(a), (b) and (d) as set out in [22] above.[30] I will address the grounds of appeal in a different order from the order in thenotice of appeal in order to better enable a Synlait analysis.Grounds (a) and (g): the creation of a new easement/variation of the easement[31] It is convenient to deal with grounds (a) and (g) together. Mr Elsmore did notadvance separate submissions in relation to ground (g).[32] Mr Elsmore submits that in his decision the Judge ignored the grant of theeasement and focused upon uses of the right of way that are not contemplated by theterms of the easement: the opening of doors for ventilation, allowing maintenanceworkers to access the right of way from the interior of the units in the arcade to allowentry on to the roof of the arcade and for access to the air-conditioning units and waterpipes on the wall of the arcade along the side of the right of way for service and repair.[33] Mr Elsmore submits that in the circumstances where the Judge accepted thatthere was a change in use of the right of way, the Judge's acceptance of new uses isnot a modification of the easement but the creation of a new easement. He submitsthat ingress and egress to and from Devonport Road was the purpose of the right ofway when it was granted and the fact that the easement can no longer be accessed atits Devonport Road end means that the right of way is no longer capable of use andmust be extinguished.[34] Mr Fraundorfer submits that the submissions for the Bowens misconstrue theJudge's consideration of "all relevant factors" as the Judge having somehow created anew easement or modified the right of way. He submits the Judge did no such thing.Rather, what the Judge did was to apply the second stage of the two-stage Synlait testand look at all of the material before the Court bearing on the question of whetherextinguishment was right and proper. Mr Fraundorfer submits that as part of hisassessment the Judge noted other uses being made of the right of way which are ofbenefit to the Body Corporate and its unit owners and occupants and the prejudice thatwould result from the loss of those benefits if the right of way was extinguished. Hesubmits that the fact-finding exercise did not involve the creation or recognition ofnew rights. Nothing in s 317 nor in Synlait obliged the Judge to consider only whetherthe right of way is still capable of its original use.[35] In any event the Body Corporate's position is that access for maintenance andventilation from the benefitted units is within the scope of the original grant.Discussion[36] A close reading of the wording of the grant does not support the interpretationplaced on it by Mr Elsmore. In other words, I do not accept his submission that thefact that the easement can no longer be accessed from its Devonport Road end meansthat the right of way is no longer capable of the (only) use anticipated. I say thatbecause of the use of the word "and" in the original grant which I have italicised in[17] and [18] above. My reading of the easement is that the occupiers of the benefittedunits have a right of egress and regress upon the right of way from their units for thepurpose of access from the arcade land. And as well, they have a right, includingingress, to and from Devonport Road. In other words, the access to and from thearcade on to the right of way is not solely for the purpose of access to and fromDevonport Road.[37] In conclusion on appeal grounds (a) and (g) the Judge did not create a neweasement or vary the existing easement.[38] I will consider the various uses of the right of way later in the judgment whenaddressing the second stage of the two-stage Synlait test.Ground (c): the Judge was incorrect in fact and law to find that the easement hadnot changed in its use[39] Mr Elsmore submits that the Judge erred in finding that the use of the right ofway had changed but not sufficiently so for the easement to be extinguished.Mr Elsmore says this is a case where the change in use is so fundamental that the rightof way as granted can no longer be used. Mr Elsmore again comes back to hisoverarching submission that the fact that no party can access the right of way as a wayinto and out of Devonport Road is a matter that the Court should have given moreweight in determining whether or not to grant the application.[40] Mr Fraundorfer submits that the Judge did find that "the nature and extent ofthe use of the easement land has changed".10 He rejects the proposition that the Judgeought to have treated this fact of change as the "fundamental" fact because that wouldbe contrary to governing authority. It also ignores the plain wording of s 317(1). Theword "ought" requires a broader assessment than simply finding that there has been achange in fact.11Discussion[41] I approach this ground of appeal in terms of its wording. The Judge did findthat the nature and extent of the use of the right of way had changed. I repeat therelevant paragraph, which is set out at [22] above:[13] While I agree that the nature and extent of the use of the easementland has changed (predominantly now excluding the use of rear doors fordelivery of goods), I am not satisfied under s 317(1) of the Property Law Act2007 that the easement ought to be extinguished and decline the applicationaccordingly.[42] There was no error by the Judge in his finding on "use". I will address theissue of whether the easement thus "ought" to have been extinguished later in thisjudgment.10 At [12]. Set out in [22] above.11 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [138].Ground (d): there was no evidence to support the conclusion that the easement isused by the benefitted units to open doors and to access the easement formaintenance[43] Mr Elsmore refers to the affidavit of Mr Bridgens in which he said: "I believethe owners of [principal units 1-4] sometimes open up their doors for ventilation orcould make use of them during a fire as an emergency if the main egress to the arcadewas unsafe". (Emphasis added). He says this is not sufficient factual evidence.[44] Mr Elsmore also says the Judge did not refer to Mr Bowen's evidence in replyregarding the use of the right of way by those in principal units 1-4.[45] In response Mr Fraundorfer says there was evidence not only fromMr Bridgens but also from unit owners. Further, the evidence of Mr Bridgens referringto his "belief" is properly read as "to the best of my knowledge".Discussion[46] Mr Bridgens states in his affidavit that:[19] The right of way also provides access to the roof of the PiccadillyArcade for maintenance and other works, and drainage pipes and air-conditioning units extend out the back of the wall. These need to be accessedfor maintenance. The drain pipes were recently installed to the Bowens'satisfaction as a solution to the discharge of rainwater onto their land, whichthey had complained to the Body Corporate about.[40] The right of way is of course also accessible from each of principal units1-4. I believe the owners of these units sometimes open the rear doors forventilation, or could make use of them during a fire as an emergency exit ifthe main egress through the Arcade was unsafe.[41] Also, as is visible in the photographs I have marked "G", there are waterpipes and air-conditioning units extending from the wall of the Arcade. Theseneed to be accessible for maintenance. If the Bowens insist that ourmaintenance contractors are unable to cross the strip of land to access thesepipes, walking through the units from the main right of way in the centre ofthe Arcade to the rear wall is the only way to do this. The right of way is alsothe only practicable way of maintenance workers accessing the roof of theArcade when required, using the right of way to unload workers and tools aspart of doing so.[47] In his affidavit in reply Mr Bowen said that Unit 3 cannot use its rear door asit is completely blocked. He also says the doors to Units 3 and 4 are 640 mm aboveground level and the door to Unit 2 is 350 mm above ground level. He says use ofthose doors by a tenant (for whatever purpose) could give rise to health and safetyissues.[48] I consider there is sufficient evidence from Mr Bridgens, notwithstandingMr Bowen's affidavit in reply, to find that the right of way is used for the variouspurposes identified by the Judge. I accept that the use of the word "believe" can beread in the way in which Mr Fraundorfer submits, namely "to the best of myknowledge".[49] I will address the further evidence of Mr Bowen in reply regarding the use ofthe right of way in the context of Ground (f), whether the removal of the easement willsubstantially injure any party.Ground (e): failure by District Court Judge to consider the burden upon theservient (burdened) land in allowing the easement to remain[50] This ground relates to s 317(b) of the Act but was not developed inMr Elsmore's submissions.[51] Mr Fraundorfer submits that even if the Judge had decided that the easementwas not being used as a right of way the Judge would have needed to consider theBowens' proposed use of their property under s 317(b) and how the continuedexistence of the right of way is said to "impede the reasonable use" of the Bowens'property. Mr Bowen's evidence was simply that if the easement remains it would bean unreasonable impediment to any future development plans.Discussion[52] The extent of Mr Bowen's evidence on this issue is that:[19] We purchased the property with a possible long-term view to redevelopthe current commercial use, in conjunction with the existing tenant, to bring itin line with the modernisation and commercial upgrade of Tauranga's CBD.If the easement remains it would be an unreasonable impediment to any futuredevelopment plans.[53] The onus is on an applicant to satisfy the Court that the easement should beextinguished.12[54] The Supreme Court made it clear in Synlait that the fact that the owner of theburdened property purchased the property with knowledge of the easement (covenantsin that case) does not make s 317(1)(b) inapplicable. The Supreme Court noted thatgiven any prudent purchaser of land will have searched the title, it can be expectedthat an applicant under s 317 will have known (or ought to have known) of thecovenant when buying the land. If that is a disabling factor it will be a disabling factorin virtually every case.13[55] Further, the Supreme Court also considered it is incorrect to say s 317 cannotbe used to free the owner of burdened land from an easement (or covenant) simply toimprove the enjoyment of his or her property for his or her private purposes.14[56] Even accepting the above principles, the best the Bowens can say is that theirpurchase of 53 Devonport Road was made with a "possible" long-term view toredevelop the property. Further, there is no evidence from the Bowens as to how thecontinued existence of the easement would be an unreasonable impediment to anyfuture development plans. Mr Bowen simply makes that statement of opinion withoutan evidential foundation for doing so. In addition, there was no evidence as to howthe use of the land in a future development would be a use in a different way or to adifferent extent from that which could reasonably have been foreseen by the originalparties to the easement at the time of its creation as is required under s 317(1)(b).[57] I, therefore, consider that there is an insufficient evidential foundation tosatisfy s 317(1)(b).12 Manuka Enterprises Ltd v Eden Studios Ltd [1995] 3 NZLR 230 (HC) at 233; Re BarfilonInvestment Ltd [2019] NZHC 780 at [23]; and New Zealand Industrial Park Ltd v Stonehill TrusteeLtd [2019] NZCA 147 at [72].13 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [164].14 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [86] citing Okey v Kingsbeer [2017] NZCA625, (19 NZCPR) at [52].Ground (f): removal of the easement will not substantially injure any party[58] This ground relates to s 317(1)(d) of the Act. Mr Elsmore submits the onlyeffect the removal will have is the benefitted units in the arcade may not be able toopen the rear doors of their units. He says that is not a substantial injury to any party,especially when they all have air-conditioning units.[59] Mr Fraundorfer refers to the test in s 317(1)(d) pursuant to which the Judgewas required to decide if the extinguishment would "substantially injure any personentitled". He submits that in this context "substantial" means something more than"theoretical or fanciful"15 but less than "large or considerable".16 To satisfy the Courtit could act under s 317(1)(d) the Bowens need to demonstrate that interference withthe Body Corporate's property rights would not cause injustice.17[60] As well as the economic and practical value of the right of way relied on bythe Body Corporate, Mr Fraundorfer refers to the continued existence of the right ofway having the "incidental benefit" of impeding the Bowens' possible redevelopmentof their land.18 Mr Fraundorfer submits the Bowens' application appears to be a"want" rather than a "need" while the Body Corporate has real benefits to protect foritself and its members.Discussion[61] The Supreme Court in Synlait referred to the test in s 317(1)(d) as follows:19[103] The inquiry under s 317(1)(d) focuses on whether the extinguishmentor modification of the covenant will "substantially injure" the owner orowners of the benefited land. The court must be satisfied that it will not doso. [104] Section 317(1)(d) contemplates that the benefited owner may beinjured by removal of the covenant so long as that injury is not substantial. Itwas common ground that for the injury to be "substantial", it must be "real,considerable, significant, as against insignificant, unreal or trifling".Australian cases express this in slightly different language, but the substance15 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [104].16 At [104] adopting Re Mason and the Conveyancing Act [1962] NUSWR 762 (SC) at 928.17 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [105].18 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd [2021] NZCA 411 at[52] adopting Tujilo Pty Ltd v Watts [2005] [NSWSC] 209, (2005) 12 BPR 23, 257.19 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6 (footnotes omitted).is the same: the injury must be real and have present substance, rather thanmerely being theoretical or fanciful.[105] The injury may be of an economic kind (for example, a reduction inthe value of the benefited land), physical kind (for example, being subjectedto noise or traffic), or intangible kind (such as impairment of a view, intrusionupon privacy, unsightliness or an alteration to the character or ambience of theneighbourhood).[106] Assessment of substantial injury requires the court to compare theposition of the owner of the benefited land with the covenant in place with theposition if the covenant is modified or extinguished. [62] As well as the evidence of Mr Bridgens already referred to, there are affidavitsfrom owners of two of the benefitted units in the arcade. Mr Stone, the owner ofprincipal unit 2, says if he ever needed to re-tenant the property, the existence of therear access way would remain a clear selling point to potential tenants. Mr Gardiner,the owner of principal unit 4 (untenanted at the time the affidavit was sworn), sayswhen he was showing prospective tenants through the unit, they were very interestedin having the rear door available for inwards goods and for additional access. He saysas a real estate agent that did not surprise him. He says the rear access door isdefinitely a selling point in marketing the unit to prospective tenants.[63] In his reply affidavit Mr Bowen notes that there was no affidavit in oppositionfrom principal units 1 and 2 (presently untenanted) in the arcade. He also makes thepoint that the rear doors cannot be used for deliveries of inwards goods because thereis no right of access across the strip of land.[64] For completeness I mention that Mr Elsmore made a submission that access tothe arcade roof could be gained from other points along the perimeter of the arcadebut there was no evidence that this was possible. I accordingly put that to one side.[65] There is also Mr Fraundorfer's submission that the continued existence of theright of way has the incidental benefit to the owners of the benefitted units of impedingthe Bowens' possible redevelopment of their land. In Body Corporate 193056 vPaihia Property Holdings Corporate Trustee Ltd, the Court of Appeal disagreed withthe Judge at first instance that the likely development of the burdened land that wouldbe enabled by the relocation of a driveway easement was a matter beyond the Court'spurview on an application to modify an easement.20 The Court of Appeal referred withapproval to a judgment of the Supreme Court of New South Wales in Tujilo Pty Ltd vWatts21 in the context of a provision which is in materially the same terms ass 317(1)(d) of the Act. The Court of Appeal referred to that decision in that case asfollows:22Campbell J noted that the grant of an easement over land permits a particulartype of activity on the burdened land but the grant of such an easement hasincidental benefits of preventing development of the land in a mannerinconsistent with the activities the easement expressly allows. The Judgeconsidered such benefits could appropriately be taken into consideration whendeciding whether there was substantial injury to the grantee by a proposedmodification or extinguishment of an easement so long as there was asufficient connection between the injury and the grantee's ownership orinterest in the benefitted land.[66] In the present case any redevelopment of the Bowens' property to the boundaryof the arcade land would prevent any use at all being made of the rear doors to the fourbenefitted units in the arcade.[67] Even taking into account Mr Bowen's evidence in reply I am satisfied that theuses referred to by Mr Bridgens are not "insignificant, unreal or trifling". Without theaccess for the delivery of inwards goods the injury is not as substantial as it mightotherwise have been but it is nevertheless real, considerable and significant.[68] The onus is on the Bowens to show that the proposed extinguishment will notcause any injury in terms of s 317(1)(d).23 The Bowens have not discharged that onus.Ground (b): alleged failure to apply Synlait[69] Mr Elsmore submits that the Judge failed to consider all relevant factors andthat has meant that he failed to apply Synlait appropriately. Mr Elsmore says therelevant factor that should have been brought into consideration was the nature andgrant of the easement in particular. He repeats his submission that the easement was20 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd, above n 18, at [51].21 Tujilo Pty Ltd v Watts, above n 18.22 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd, above n 18, at [52](footnotes omitted).23 Body Corporate 193056 v Paihia Property Holdings Corporate Trustee Ltd, above n 18, at [53];and Chand v Auckland Council [2021] NZCA 282, (2021) 22 NZCPR 326 at [51].granted as a right of way to allow access from Devonport Road for the delivery ofgoods. That is no longer available and it is that lack of access that should have beenthe driving point.[70] Mr Fraundorfer submits that while the Judge did not mention Synlait by name,it is clear the Judge applied the test from that judgment. He submits that the substanceof the case for the Bowens in the District Court, namely that in terms of s 317(1)(a),the right of way is "redundant" as it is inaccessible, was clearly and fairly recorded inthe decision. Recognising this the Judge focused primarily (but not exclusively) onthe evidence as to the use of the right of way. He says the Judge did accept that theuse of the right of way had changed. He then considered whether this meant the rightof way "ought" to be extinguished, treating it as a relevant factor as Synlait requires.24After considering "all relevant factors", including the Bowens' knowledge of theexistence of the right of way at the time of the purchase, the years of inaction by theBowens, the Bowens' lack of redevelopment plans and the ongoing use of the right ofway from the arcade land this led the Judge to conclude he did not consider he shouldor ought to make an order as sought.Discussion[71] I have found that the Bowens have not made out the grounds in s 317(1)(b) or(d). That leaves s 317(1)(a) in respect of which the Supreme Court in Synlait said:25We acknowledge, however, that if the court finds one or more of the groundsin s 317(1)(a) is engaged, it will have found that (using the words of s317(1)(a)) "the easement or covenant ought to be modified or extinguished(wholly or in part)", which may bring into play at the first stage some of theconsiderations that are also relevant at the second stage.[72] Mr Elsmore refers to the nature and extent of the use of the right of way havingchanged, impliedly referring to s 317(1)(a)(i). That provision refers to a change in thenature or extent of the use being made of the benefitted land and the burdened land orboth rather than the easement itself. There is no change in the nature or extent of theuse of either the benefitted land or the burdened land in the sense that they remain ascommercial properties. However, there is a change of use in the sense that the24 Bowen v Piccadilly Arcade Body Corporate, above n 1, at [5]–[7] and [12].25 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [67] (footnotes omitted).benefitted land has changed from a single occupier to a Body Corporate with multipleowners of units. Additionally, the easement only serves four of those owners and notthe whole of the arcade land. I accept s 317(1)(a)(i) is established.[73] Section 317(1)(a)(iii), any other circumstances the court considers relevant, isalso established. The Judge found that there had been a change in the nature and extentof the use of the easement, "predominantly now excluding the use of rear doors fordelivery of goods". The respondent does not take issue with that finding.[74] In Synlait, the Supreme Court said, in relation to s 317(1)(a) that the focus isnot on the fact of change but on the impact of the change on the benefit or burdenflowing from the covenant (or in this case the easement).26[75] In the present case:(a) There is no evidence of any burden to date on the Bowens' property asa consequence of the partial extinguishment of the easement;(b) In terms of future development I have found that the Bowens have notestablished that the continuation of the right of way in its existing formwould impede the reasonable use of their land in terms of s 317(1)(b);and(c) Nor have the Bowens established that the proposed extinguishment willnot substantially injure the owners of the benefitted units in the arcadein terms of s 317(1)(d). Those units use the right of way for purposesother than ingress and egress from and to Devonport Road.[76] In those circumstances, although the use of the right of way has changed, theJudge was correct in deciding that he was not satisfied that the easement ought to beextinguished.26 Synlait Milk Ltd v NZ Industrial Park Ltd, above n 6, at [138].Application to admit new evidence on appeal[77] The Bowens seek leave to file an affidavit from Mr Bowen which refers to aninwards goods area for the arcade off a service lane which runs from Grey Street onthe opposite side of the arcade to the right of way.[78] Mr Bowen says that the existence of this inward goods area was brought to hisattention on the day of the hearing in the District Court. He says he was not able tofile an affidavit on the issue.[79] The formal application seeking leave to adduce further evidence repeats thatthe existence of the inwards goods area came to the attention of the parties during thecourse of the hearing in the District Court. However, in the course of submissionsMr Elsmore advised this Court that the existence of the inwards goods area wasbrought to his attention the night before the hearing. He says although there was noaffidavit evidence there was reference to the area in the hearing.[80] Mr Elsmore submits that the existence of this inwards goods area should havebeen referred to by the Body Corporate in its evidence as it is the Body Corporate'sbuilding. He submits that the fact that there is in existence a designated delivery baycompletes the picture for the Court when determining whether the right of way shouldbe extinguished.[81] The application is opposed by the Body Corporate. Mr Fraundorfer submitsthe Bowens could have with reasonable diligence presented their new evidence in theDistrict Court. The evidence is therefore not fresh.27 Mr Fraundorfer points to thefact that the inwards goods area is accessible from a Council service lane – a publicroad – extending from a driveway on Grey Street, a few dozen metres at most fromthe separate service lane leading to the right of way. The Bowens have owned land inthe area for decades.27 Erceg v Balenia Ltd [2009] NZCA 48, [2009] NZCCLR 32 at [15].[82] Mr Fraundorfer resists the submission that the Body Corporate had anyobligation to bring the contents of the new evidence to the Court's attention. TheBowens as the applicants in the District Court bore the onus of proof.[83] Further, Mr Fraundorfer says the proposed evidence is not cogent. As theaffidavit evidence tendered in opposition to the application to adduce fresh evidencestates, the experience of the Body Corporate and the tenants of the benefitted units isthat the inwards goods area is not a practical alternative as a delivery entrance. It ison the far side of the arcade from the benefitted units, it is difficult for trucks to accesswhile being convenient for only trucks to use, and the layout of the areas it leads tomeans using it as a goods entrance is cumbersome. Using the inwards goods area isno better than simply loading and unloading from the footpath in Devonport Road.Further the inwards goods area does not provide a number of the benefits the right ofway offers the occupants of the benefitted units or the arcade as a whole. It does not:(a) Allow for access to the pipes and air-conditioning units extending fromthe wall of the arcade adjacent to the right of way;(b) Provide additional ventilation and light for the benefitted units;(c) Provide an alternative emergency exit from the benefitted units; and(d) Provide the incidental benefits of the existence of the right of way interms of restraining development of 53 Devonport Road.[84] As a consequence Mr Fraundorfer submits there is no reasonable likelihoodthat the proposed new evidence taken together with the other evidence before theDistrict Court would have made a difference to the outcome of the Judge's decision-making process.[85] Under r 20.16 of the High Court Rules 2016, leave to adduce further evidenceon appeal may be granted if there are "special reasons". The Court can receive furtherevidence if it considers that the interests of justice require it to do so.28 Generally thefurther evidence must be fresh, credible and cogent. Evidence will not be regarded asfresh if it could, with reasonable diligence, have been produced at trial. Although theabsence of freshness is not an absolute disqualification. When the further evidence isnot fresh, it will not generally be admitted unless the circumstances are exceptionaland the grounds compelling. The further evidence will also need to pass the tests ofcredibility and cogency.[86] The evidence is not fresh. The Bowens could have with reasonable diligencepresented the proposed new evidence in the District Court. The onus was on them.The evidence is not cogent. It could possess cogency if the Judge's refusal to grantthe application to extinguish the easement had been based materially or significantlyon a concern not to deprive the benefitted unit owners of a sole goods entrance. Butgiven the Judge's recognition that the Bowens have now prevented the use of the rightof way for that use, because of the need of the unit owners to cross the strip of land,that is not the case.[87] The application to adduce further evidence on appeal is refused.Result[88] The appeal is refused.Costs[89] I did not hear from the parties on costs. Costs are therefore reserved. TheBody Corporate as the successful party is prima facie entitled to costs. If the partiesare able to agree costs a joint memorandum should be filed within 20 working days ofthe date of this judgment. If costs cannot be agreed then the Body Corporate is to fileand serve its memorandum within five working days of the date for the jointmemorandum. The Bowens are to file and serve their memorandum within fiveworking days of the date of service of the Body Corporate's memorandum.28 B v A [2020] NZHC 580 where the Court summarised the relevant principles including the furtherprinciples referred to in the rest of [86].[90] Costs memoranda should not exceed five pages, excluding attachments. I willdetermine costs on the papers._____________________________Gordon JAnnexure AAnnexure B